You are planning to withdraw some amount of money every year for the next 23 years....

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Question

You are planning to withdraw some amount of money every year for the next 23 years. You earn 6% on your deposits, what is the PV factor of an annuity for this problem? Round your answer to 4 decimals, for example 8.1234

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Answer 1

Answer #1

Solution:

Given that Number of year, n = 23 and Interest rate, i = 6%

The formula for calculating the PV factor is

PV factor = [(1 + i)^n - 1]/[i (1 + i)^n]

PV factor = [(1.06)^23 - 1]/[0.06*1.06^23]

PV factor = 2.81975/0.229185

PV factor = 12.3034

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Answer 2

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You are planning to withdraw some amount of money every year for the next 23 years....